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4/24/2008
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Info Tech Salaries Drop, Our Survey Finds. What's Holding U.S. Pay Down?

The dip in U.S. median pay is the first since the tech bubble popped. The culprits include the economy, outsourcing, and possibly even increased hiring.

Salaries for U.S. tech professionals are getting the squeeze. For the first time since the popping of the dot-com bubble, InformationWeek's annual U.S. IT Salary Survey finds that the median pay for IT professionals dropped year over year.

For IT staffers, median base pay fell to $73,000, down from $74,000 the previous year. For managers, median base pay dropped to $96,000 from $97,000 last year. Median total compensation, including cash bonuses, also dipped a hair--down $2,000 to $76,000 for staff, and down $2,000 to $103,000 for managers. The survey includes more than 9,600 U.S. IT pros.

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It's unsettling for IT pros, who've weathered a tumultuous boom-and-bust-and-rally so far this decade and once again face the uncertainty of economic downturn. Wages stagnated before for U.S. IT workers, starting in 2002, as IT layoffs abounded during that recession just as the offshore outsourcing surge began (see chart, "A Decade of Paychecks" below).

chart: A Decade Of Paychecks -- Data: InformationWeek Research U.S. IT Salary Survey of 9,653 IT professionals, spring 2008; 5,080 IT staff and 4,573 IT managers

(click image for larger view)

Yet the forces holding down average salaries today are more complicated than six years ago--and probably include some good news, in the form of increased hiring, which is growing faster in the lowest-paying IT segments. The economic slowdown likely is taking its toll and could do more damage. There are long-term forces at work, including competition with lower-cost offshore talent, though a surprisingly small share--about one in five--sees outsourcing driving down U.S. IT pay. Other factors pulling down median pay could be retiring baby boomers being replaced by less-expensive younger workers, and even an industry-wide mismatch of skills with job titles. "My guess is that all of these factors are playing a role in the IT wage picture," says Ron Hira, a professor of public policy at Rochester Institute of Technology.

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IT remains a well-paying professional career in the United States, one that employs around 4 million in the country, where jobs have been growing quickly and opportunity abounds for people with the right skills. IT has always been a segmented market depending on skill levels, and that continues today. A staff specialist in ERP or Web infrastructure can easily make six figures, while the typical help desk pro makes half that. Competition's fierce for people with high-end skills, including the right mix of industry and tech experience. "If you're a former nurse doing tech stuff now, you're good to go," says John Glaser, CIO at the Boston-area hospital group Partners HealthCare, who sees a talent crunch in health care IT as hospitals race to implement e-records.

However, IT also remains a profession of continuous change--like the huge shift early this decade that slashed programming jobs and brought a surge in management functions--making data like our salary survey critical for any serious IT professional to understand. This article will parse through the forces holding down U.S. IT wages. The accompanying article, "Average Info Tech Pay Drops To $105,000 For Managers, $78,000 For Staff, Our Survey Finds", provides an in-depth breakdown of the survey stats.

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